Published: 2018-02-27 07:45:52 CET
BankNordik P/F
Inside information

Satisfactory financial results for 2017

- BankNordik delivers on goal of attracting new personal customer relationships

Announcement no. 1/2018

Highlights of BankNordik's annual financial results for 2017:

2017 results vs. 2016 results

  • BankNordik reported operating profit of DKK 233m for 2017, an increase of DKK 42m compared to 2016 (+22%).
    • Net interest income was down by DKK 26m year-on-year due to tighter interest margins and the controlled run-off of corporate lending in Denmark.
    • Fee and commission income was up by DKK 4m due to higher income from asset management activity and mortgage broking services during the period.
    • Net insurance income was up by DKK 16m in 2017, due to fewer claims and a sizeable increase in premiums.
    • Operating costs were up by DKK 3m to DKK 462m, consistent with the efforts to curb expenditure growth.
    • BankNordik reversed DKK 60m in net impairment charges in 2017 (2016: reversals of DKK12m) in particular related to corporate loans previously written off that were either repaid or reversed due to improved company-specific conditions.
  • Profit before tax was DKK 235m in 2017 compared to DKK 187m in 2016 (+26%), excluding the gain on the sale of Vørður.
  • Non-recurring items amounted to an expense of DKK 18m in 2017 compared to an expense of DKK 12m in 2016.
  • Value adjustments amounted to a gain of DKK 20m in 2017 compared to a gain of DKK 8m in 2016.
  • Lending volumes were up by DKK 397m from DKK 9,141m at 31 December 2016 to DKK 9,537m at 31 December 2017, despite Danish corporate loans of approximately DKK 100m being wound-up during the period.
  • Deposits decreased by DKK 36m from DKK 12,669m at 31 December 2016 to DKK 12,632m at 31 December 2017.

“We’re delivering satisfactory financial results for 2017 at the mid-range of our guidance. The persistent pressure on interest margins throughout 2017 was countered by an increase in lending, higher customer activity, and a sizeable increase in net insurance income. I am particularly pleased to announce that our capital position strengthened significantly in 2017, which brings us just about to where we want to be in terms of excess capital,” said BankNordik CEO, Árni Ellefsen. 

“Relationships matter more than ever, which is why we place great emphasis on embedding an organisational culture that places the customer at the centre of business. In 2017, we successfully raised our customer satisfaction rate as measured by a net promoter score by engaging more directly with our customers. This undoubtedly contributed to the 13% increase in the number of customers enrolling in our loyalty programme. Strengthening the quality of our customer relationships will be a key determinant in facilitating further growth in the personal customer segment,” said Mr Ellefsen.


Q4 2017 vs. Q3 2017

  • Operating profit increased to DKK 97m in Q4 2017 from DKK 42m in Q3 2017.
    • Net interest income was down by DKK 2m in Q4 2017 compared to Q3 2017, due to continued pressure on interest margins.
    • Fee and commission income was up by DKK 8m compared to Q3 2017, supported by high asset management activity.
    • Net insurance income was DKK 12m in Q4 2017 compared to DKK 13m in Q3 2017.
    • Operating costs were DKK 2m lower in Q4 2017 than in the previous quarter.
    • Net impairment charges were a DKK 51m reversal in Q4 2017 compared to a reversal of DKK 4m in Q3 2017.
  • BankNordik recorded profit before tax of DKK 92m in Q4 2017 compared to a profit of DKK 30m in Q3 2017.
  • Value adjustments amounted to a loss of DKK 4m in Q4 2017 compared to a gain of DKK 5m in Q3 2017.


Capital ratios

The Group’s CET1 capital ratio increased by 1.5 percentage points year-on-year to stand at 17.5% at 31 December 2017. The total capital ratio increased to 19.7% at 31 December 2017 from 18.3% at 31 December 2016.

BankNordik believes the relevant authorities are close to finalising the Group’s individual MREL add-on. The MREL add-on is expected to be met solely by issuing Tier 3 capital.


Revised financial targets

Due to stricter capital requirements, the Group has revised its capital ratio targets for 2020. The CET1 ratio target has been raised from 13% to 17%, while the total capital ratio target has been raised from 16.5% to 20%. As such, the Group partially met the revised capital targets at year-end 2017.

Likewise, the target cost-to-income ratio has been revised from 62% to 65% by 2020 due to tougher market conditions.

The Group’s target return on equity of 10% by 2020 will, however, remain intact.      



The Group’s dividend policy has also been adjusted from a target pay-out ratio of 40% to 20-40% in order to increase flexibility with regards to impending capital requirements. Nevertheless, BankNordik remains as firmly committed to rewarding shareholders as before, circumstances permitting.

At the upcoming Annual General Meeting, the Board will propose a dividend payment of DKK 40m for 2017 (DKK 4 per share).

Share buybacks will recommence in Q1 2018 up to a value of DKK 7m. Additional share repurchases will be considered during the year.



BankNordik expects to moderately increase its lending to personal and corporate customers in 2018, while pressure on interest margins is expected to endure. Fee and commission income is also expected to increase moderately in line with higher customer activity. Income from insurance activities is expected to be less than in 2017 due to a normalisation of claims. Operating costs are expected to stay flat compared to 2017.

(The below guidance figures are provided in accordance with the upcoming changes to the adjusted income statement methodology taking effect in 2018. See the Financial Review section of the 2017 annual report for details.)

Management expects profit before impairment charges, non-recurring items, value adjustments and tax in the range of DKK 160-200m in 2018 (2017: DKK 187m).

Impairment charges on loans and advances are expected to remain low in 2018.

Net profit is expected to be in the range of DKK 100-150m in 2018 (2017: DKK 189m).

This guidance is generally subject to uncertainty and will depend on economic conditions, loan impairments and market value adjustments.


For additional information, please contact:

Árni Ellefsen, CEO, tel. (+298) 230 348

BankNordik has banking activities in Denmark, Greenland and the Faroe Islands and insurance activities in the Faroe Islands. Founded in the Faroe Islands more than a century ago, the Group has total assets of DKK 15.8bn and 400 employees. The Bank is subject to the supervision of the Danish Financial Supervisory Authority and is listed on Nasdaq Copenhagen.


Appendix: Financial highlights and comparative figures are provided below.


Financial highlights


DKK million
2017  2016 Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016
Net interest income 387 413 95 97 97 98 100
Net fees, commission and dividends 196 192 47 39 58 52 51
Income from insurance operations 43 27 12 13 9 9 -7
Other operating income 9 9 2 3 2 1 2
Operating income* 635 640 157 152 166 160 146
Operating costs* -462 -459 -112 -114 -120 -116 -114
Sector costs, etc. 0 -2 2 -1 -1 -1 1
Operating profit before impairment charges* 173 179 46 38 46 43 33
Loan impairment charges, net 60 12 51 4 5 0 4
Operating profit* 233 191 97 42 51 43 38
Non-recurring items -18 -12 -1 -17 0 0 0
Profit before value adjustments and tax 215 179 96 25 51 43 38
Value adjustments 20 8 -4 5 4 14 -10
Profit/loss before tax, excl. Vørður 235 187 92 30 55 57 28
Profit/loss before tax, incl. Vørður 235 277 92 30 55 57 28
Deposits, etc. DKKbn 12.6 12.7 12.6 13.0 13.5 12.7 12.7
Loans and advances, etc. DKKbn 9.5 9.1 9.5 9.5 9.4 9.2 9.1
Equity, DKKbn 1.8 1.9 1.8 1.7 1.7 1.7 1.9
Total capital ratio 19.7% 18.3% 19.7% 18.2% 17.9% 18.4% 18.3%
Excess liquidity relative to statutory requirement 205% 242% 205% 219% 246% 239% 242%
Operating cost/income 73% 72% 72% 75% 72% 73% 78%
Number of FTE, end of period 400 415 400 407 407 416 415

* Excluding non-recurring items and value adjustments.


Further details are available in the interim report.

Annual Report_2017.pdf
Risk Management Report_2017.pdf
IR Presentation_Q4 2017.pdf